Settlement Agreements

Looking to get a new job? Worried how you can end it on good terms? You might want to go in for a settlement agreement, a legally binding contract.

It’s going to offer you the certainty you need as you move to the next chapter of your life, without having to worry about any future legal claim against you.

The agreement is usually proposed by an employer that helps settle workplace disputes or employment issues.

In some cases, employees can also ask for this legally binding contract. Once signed, an employee cannot lodge a complaint against any of the things mentioned in the agreement.

What is a settlement agreement?

It’s a legally binding contract that is drawn after both parties have agreed to a certain resolution, compromise on a dispute or laying out the terms of departure between the two parties. The document waives an individual’s right to make any claims against the points listed in the agreement in a tribunal or court.

A settlement agreement is always in writing and often includes a payment to the employee. They are voluntary in nature and can be proposed at any stage of the employee relationship.

If the parties cannot reach an agreement, they cannot use the conditions in the document as evidence in court proceedings.

Requirements for a settlement agreement

There are several conditions that one must adhere to in order to make a settlement agreement legally binding. The agreement must be in writing and should relate to a particular complaint. Both the parties need to discuss the agreement with a legal advisor or a lawyer.

All the risks regarding the document must be thought through and it should mention the name of the advisor as well. Lastly, the document should mention that all the conditions of the agreement have been met.

An employee must get at least 10 calendar days to consider the proposed conditions in the agreement and agree or disagree with them. Since these agreements are voluntary, the parties can negotiate the conditions and give arguments until they reach the terms that are favorable to all.

However, if both parties are unable to reach the settlement, they can try other methods to resolve the problem. The parties can reach a resolution through performance management, disciplinary process or mediation.

Meeting regarding the settlement agreement

Though an employee doesn’t have to be involved in the proceedings of the agreement, they can always involve a colleague or a trade union representative for help. Employers should involve the employees in these meetings so it’s easier for both parties to reach the terms of the settlement.

Ending employee relationship

If the settlement agreement involves the dismissal of the employee, the employment either ends after a certain notice period or as per the duration agreed upon in the agreement. The duration of the notice and the payment are always a part of the agreement.

The payment should be made on the time set in the agreement or after a required condition has been fulfilled.

The other important thing to note is that settlement agreements only become binding once you receive an independent legal advice, usually by a qualified solicitor. The solicitor, you need to remember, has to send a certificate confirming the advice.

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